* FTSEurofirst 300 rises 0.3 pct, Euro STOXX 50 up 1.4 pct
* Equity markets rebound after 3-day losing streak
* Investors eye fix to Cyprus problems
* Sanofi hits 7-year highs on Aubagio hopes
* Some traders caution over buying stocks at current levels
By Sudip Kar-Gupta
LONDON, March 20 European shares broke a
three-day losing streak on Wednesday as investors bet on
policymakers finding a fix for Cyprus' bailout problems,
although some traders cautioned against buying up equities at
The pan-European FTSEurofirst 300 index closed up
0.3 percent at 1,198.88 points while the euro zone's blue-chip
Euro STOXX 50 index rose 1.4 percent to 2,708.90
A 2.5 percent gain at Sanofi added the most points
to the FTSEurofirst 300 and sent the drugmaker to 7-year highs,
as traders cited speculation that Sanofi could get regulatory
approval for its Aubagio multiple sclerosis treatment pill.
European banks also featured on the FTSEurofirst 300
leaderboard, on expectations that policymakers would find some
solution for Cyprus' funding crisis to prevent any major
repercussions from Cyprus' troubles.
Union Bancaire Privee fund manager Rupert Welchman felt the
support of the European Central Bank (ECB) was sufficiently
strong to prevent any major market hit from Cyprus, which
rejected a proposed levy on bank deposits as a condition for a
European bailout earlier this week.
"You've still got the ECB saying it will provide liquidity,"
said Welchman, whose portfolio is overweight on northern
European financial stocks.
"Cyprus will, of course, be a clear negative for European
sentiment and it is a new and substantial negative, but the
bigger picture is that Europe is trying to follow a roadmap to
recovery and in this quest, Cyprus is a sideshow," he added.
CAUTION AGAINST BUYING ON DIPS
In spite of Cyprus' woes, investors have stuck with a
longer-term bullish outlook for European equities.
Equity markets have been propped up by injections of
liquidity by the world's central banks, and a Reuters poll this
week forecast that the Euro STOXX 50 would rise to 2,800 points
by the end of June, and to 2,935 points by the end of December.
The broader STOXX Europe 600 index was seen rising
to 305 points by end-June and to 317 points by the end of 2013.
Investors have been encouraged by pledges from the ECB last
year to defend the euro currency, which led to stock markets
rallying in the second half of 2012.
Expectations that problems over Cyprus and Italy's political
deadlock will only cause a minor, short-lived pull-back on
equity markets in March and April have led some investors to buy
up shares on days when stock markets fall.
However, technical analysis firm Lowry Research said
investors should wait for better opportunities to buy into the
German DAX and Euro STOXX 50, since both indexes looked
set for short-term weakness.
"Market conditions in Germany are representative of the
European region as a whole. The longer term outlook is positive,
yet there are signs of near term weakness and increased selling
into the recent breakout to new rally highs in the Euro STOXX
50," said Lowry Research senior vice president Tracy Knudsen.
"As is the case for the DAX, new buying in the Euro STOXX 50
should be avoided for now, as a market correction should offer a
more optimal entry point," she added.
JN Financial derivatives trader Rick Jones expected equity
markets to trade sideways this week but added investors would
look to book gains made on equities since the start of 2013 next
week before the Easter holidays.
Since the start of 2013, the FTSEurofirst 300 has risen
around 6 percent. The Euro STOXX 50 has gained some 3 percent
while the DAX has risen 5 percent.
"In the near term, we see sideways trading with a downward
bias," said Jones.